American Airlines, U.S. Airways unveil $11b merger

American Airlines and United States Airways Group said they plan to merge to form the world’s biggest airline with a combined equity value of $11 billion.

The widely expected merger caps a wave of consolidation that has helped put U.S. airlines on more solid financial footing.

The merged airline will be majorly owned by creditors, unions and employees of American parent, AMR Corp, which filed for Chapter 11 bankruptcy in November 2011.

The airline, which is to carry the American Airlines name, would be two per cent larger than current numbr one-United Continental Holdings Incorporated in traffic, as measured by the number of nautical miles flown by paying passengers worldwide.

“By utilising American’s connecting network with penetration into smaller markets, and global alliance revenues, the new company could more effectively raise revenues and reduce costs, while addressing labour integration and capital problems,’’ Sterne Agee & Leach analyst Jeffrey Kauffman said in a note before the deal was announced yesterday.